Plain-English definitions, reviewed by an independent investor
Market Index
A market index tracks a basket of stocks to represent a slice or the whole market’s performance.
A market index tracks a basket of stocks to represent a slice or the whole market’s performance.
(A weighted average of selected constituents)
Why it matters
It is the scoreboard everyone quotes and the benchmark most funds try to beat.
Common confusion
An index is unbuyable directly; you track it via funds that replicate it.
Frequently Asked Questions
Price-weighted vs cap-weighted?
Some weight by price, most by size; the method changes who leads.
Why index funds?
They aim to match the index cheaply instead of beating it.